Business Strategy: Achieving Competitive Advantage

• Strategy is an integrated and coordinated set of commitments and actions to exploit core competencies and gain competitive advantage. It also involves mobilizing resources to achieve success
• A firm achieves competitive advantage (CA) by implementing a chosen strategy to create superior customer value, which competitors cannot imitate
• Since CA is impermanent, firms must exploit current advantages and plan for future advantages

Fields of Strategy

• Economics considers market functions and how they can benefit the firm
• Psychology considers manager's motivations and behavior
• Sociology considers how firms' strategic decisions impact each other

Reaching Competitive Advantage Through Strategy

• Strategy involves decision support, enhancing decision-making quality
• Strategy is also a coordinating device, facilitating coordination among organizational members
• Strategy targets long term goals
• Strategizing is an action, not a strategy document until implemented

Components of Successful Strategy

• Essential elements include effective implementation plus simple goals, profound understanding of all factors

• Effective implemention required analyzing external environment, and internal capabilities.

• Limitations include non-obvious choices, uncertainty, limited resources, and delayed outcomes

• Realized strategy is a mix of intended and emergent strategies

• The strategic management process involves commitments, decisions, and actions for strategic competitiveness and above-average returns

• Above-average returns exceed investor expectations relative to risk

Achieving Above-Average Returns

• Involves analyzing the external environment and internal organizations

• Identification of external opportunities/threats and internal resources/capabilities

• Strategy development should align with mission and values

• Achieve above average performance

• Strategic flexibility refers to firm capabilities to respond to changing market demands and opportunities

• Hypercompetition describes markets with intense rivalry, rapid change, and low entry barriers

Additional Considerations

• Global economy and protectionism affect strategy

• Globalization and global supply chains also play a role

• Liability of foreignness refers to risks when a firm competes outside its domestic market

• Global value chain refers to processes where firms add value to raw materials through manufacturing

• Technology and tech changes are potential disruptive technologies

• The I/O Model explains how external environment influences strategy and actions, emphasizing external environment and diversification determine success.

• Firms competing in industries with high profit potential and resource implementation learn how to use their resources to implement required strategy

• Key assumption of org decisions makers are rational individuals who are committed to act in the firms best interests

Resource Based Model

• The model emphasizes that firms outperform from strategy and ability to achieve above average returns

• Resources must be valuable, rare, and costly to imitate

• Capabilities are used by resources to perform integrative tasks or activity

• Stakeholders are individuals, groups, or organizations influencing and affected by the firm's objectives, actions and outcomes, and are of different importance

Stakeholder Justice

• Procedural justice means opinions are considered
• Distributional justice means justice is achieved
• Interactional justice means being treated with respect

Strategic leaders

• Strategic leaders select actions aligned with vision, mission, and values
• Organizational culture encompasses ideologies, symbols, and values influencing business conduct
• Firm vision, mission, and values are foundational for strategic actions to achieve AAR

Lecture 2: External Analysis

• Business environment layers from macro to industry to strategic group/competitors to the organization
• The PESTEL Framework is used for the macro-environment, assessing political, economic, socio-cultural, environmental, legal, and technological factors

Porter's 5 Forces

• Used for industry analysis and determines long-term profitability
• Key success factors help achieve CA
• Firms can take strategic actions to improve attractiveness of their industry

Entry Barriers

• Capital and economic requirements
• Product differentiation
• Access to distribution channels
• Government and legal barriers
• Expected retaliation

Supplier Power

• Size and concentration is important
• Buyer switching ability
• Ability to substitute products
• Ability for suppliers to forward integrate

Buyer power

• Relative bargaining power
• Abilities for buyers to backwards integrate
• Price sensetivity

Rivarly/Industry Competitors

• Substitutability

• Are buyers willing to substitute if there are options?

• Are manufactuers able to switch production between types of products?

• Strategic groups are two principle strategic variables, for example; scope of activties, and resource commitment

• Establish organizations by position to these variables

• Identify clusters of variables

Competitor Analysis

• Future objectives
• Current strategy
• Assumptions
• Resources and capabilities

Lecture 3: Internal Analysis

• Based on the resource based view
• A firms resources makes up its competitive advantage
• Focus on internal analysis because firm-level influences are the largest systematic drivers of firm performance
• Markets are volatile and firms can change their market as desired

Problematic aspects of market-oriented strategizing

• Firms either have strategically relevant resources or necessary resources

• There are tangible and intangible, but intangible are more valuable

• Capabilities exists when resources integrate to achieve a task

• Resources in order to turn into capabilities, motivation and organization structure is required

Value Chain Analysis

• Divides into sections of support functions and value chain activties
• It's a tool to analyze cost position and ways to create value
• Segment into primary and support activities
• Identification of where firms can create superior value versus competitors
• The VRIS Framework is used when appraising resources

What the Framework Appraises

• Value

• Rareness

• Inimitability

• Substituability

• Evaluating the strength and weaknesses based on resources

Key Takeaways

• Match internal competencies with external factors
• Competitive advantage should be constanlty develoepd
• Intangible resources and capabilities are key to sources of advantage
• Core competencies must nurtured without becoming rigidness
• Value chain helps find advantages
• Perform careful analysis before outsourcing

Lecture 4: Competitive Strategy And Dynamics

Levels of strategy

• Corporate strategy is about the scope of the organization
• Business strategy is how businesses compete in their market
• Functional strategy is how components effects implementation for high strategy

Business Model

• Arrangement of activties that describe a value proposition Three components:

1. What is offered to who? (value creation)
2. How is VP structured? (value configuration)
3. Sources and revenue of value proposition? (value capture)

• Cost vs value and broad vs narrow scope

Three main sources of lower costs

• Costs of input resources
• Economics of scale
• Experience (learning curve)

Two sources of differentiation

• Material attributes
• Non material attributes

Lecture 5: Corporate Strategy and M&A

• About deciding areas to compete in
• Corporate strategy is about deciding where in order to win
• Means that LR profits of multi-business firm are greater than the summed profits its business could earn

Corporate parents

• Value adding
• Value destroying

Make vs buy

• Vertical integration is about entering activites where organization is its own supplier or cutsomer

• Transaction costs are associated with participating to market exchanges

• The access to market isn't free and to involves transaction costs

• Look at searching, decision cost, policing and enforcement costs

• Scope of firm is decided by difference transaction vs coordination cost

Merger and acquisitions

• Merger involves the combination of two separate firms to make single firm
• Acquisition involves purhcasing shares for company

Strategic Alliance

• The combination of resources to make competitive advantage Alliance may involve:
  • Non-equity
  • Equity
  • Joint Ventures

Growth Strategies

• Market penetration
• Product development

Lecture 5: Corporate Governance

• Refers to structure to control organization
• Ensure Stakeholders held accountable
• Direct roles and relationships of organizations

Roles of governance

1. Direct and control
2. Checks and balances
3. Address Agency problems

• Problems comes when wanting maximize firm value
• Managers wanting personal benefits
• Incentives, monitoring, enforcement costs

Key Issues of Theory

• Adverse selection
• Moral Hazard Governance Mechanisms
• Executive compensation
• Board of directors
• Corporate control
• Government and industry analysis

Stakeholder Model Of Governance

• Enphasizes anyone who has legitimacy interested
• Unlike shareholder it considers broader ideas
• Emphasis on creating value

Lecture 7: Platform strategy

• Business model uses enabling technology
• To connect people and resources
• Users and consumers with the purpose of matches
• information is good candidate for platform

Advantages of platforms include

• More efficient scaling

• New source values and supply

• Data based tools to make looping

• Invert the firm

• The more that platform is used, the more each user gets out of it

• Also, the more potential produce

• The growth reduces value made

Two sided network effects

• Direct the user will acttracted

• Indirect value increases

• Negative growth leads to platform issue

Curation solution negative effects By access to platofrm can reduce connectiions formed

• Components of the value information with unit filtering Loop is self reinforcement, helps users access

Lecture 8 - International strategy

• Selling goods to outside domestic

Incentives

• Extended product

• Easier axis to make more

• Better develop tech

• Scale and learn to grow

• Setup operation that reduce materials

Porter Diamonds

• Factor conditions (skilled labor)
• Demand conditions (home-market demands)
• Support industries (local supplier and industries )
• Structure(how business created in home)
• Culture is a factor
• Legal Political environments

Strategies

• Multidomestic
• Global
• International
• Mix of world view for best effectiveness
• More investment the easier access for start the more its easier to make
• Financial performance is result

Financial Keys

• Profits may drop initially
• Make new learnings

Key Takeaways

• Expansion
• Different Strategies
• Balance

Lecture 9: Cooperative

• Shared objective and growth
• Advantage
• Competitive is relateable alliance
• Successfull Implementations

Types of allainces

• Two more firms creater legal

• Good environment , knowledge transfer

• Shared ownership and control assets

• Firms contracture relationship

• Explicit ( agreement of prices )

• Tacit (in directly pricing)

Startegic Keys

• More values
• Faster market access
• Chance of achieving

Markets

• Sustained long roads
• Utilities
• Cycle ( easily initmated ,high computer)
• Fast (reduce risk/cost)

Strategies

• Vertical - (partnering distriutes )
• Horizontal (same chart)

Key Takeaways

• Cooperation (create value)
• Market alliance need
• Business Level
• Support frachisng

Keys

• A strategy where firms collaborate to accieve shared objectives
• Two more firms contracture to share resources

Lecture 10: Non-markets strategy

• Help share factors

• Examples Nonmakret

• Forces of Regislation activisits etc

• Interact on more facts

Institutional

• Rules and beleifes

• Firms offer contract To gain ligitimacy that press

• Normtive

• Mimetics

• Isomorphic

• Passively conform